Subs' Way

New Team Maps Lofty Goals For '95.

December 25, 1994|By TRACY KOLODY Business Writer

Miami Subs has some lofty New Year's resolutions for 1995.

Under the direction of an aggressive new management team, the Fort Lauderdale restaurant company is determined to show a quarterly profit next year, to finish fine-tuning its menu and to begin the process of becoming a nationally recognized brand name.

And under the leadership of 30-year industry veteran Thomas J. Russo, who has been at the company's helm for almost a year, Miami Subs may just pull it off.

Russo wants Miami Subs to become an identifiable national chain. He spent the past year setting up the framework for reaching that goal.

``We want to find our own unique niche,'' said Russo, the former president of the Ponderosa Steakhouse chain and the restaurant division at Howard Johnson. Before joining Miami Subs, Russo had taken a six-year break from the restaurant industry, working as chairman and chief executive officer of Hanson Housewares Group, a subsidiary of Hanson Industries.

Russo is viewed by many in the industry as the man who can turn the company around and prepare Miami Subs for a top spot in the national quick-service food segment.

``It's been a couple of years since we paid attention to Miami Subs,'' said Steven Rockwell, a restaurant industry analyst with Alex. Brown & Sons in Baltimore.

``But I like Tom Russo, their new CEO, and I think he's building a much stronger team there,'' he said.

Under Russo, Miami Subs has already changed. The company hired a new advertising agency to roll out a national television campaign, streamlined its huge menu and constructed a state-of-the-art test kitchen and training center during the past year.

The energetic Russo, who is not above picking up trash in a Miami Subs parking lot or clearing tables at a restaurant, speaks modestly about his role at the chain, which now has 160 restaurants operating in Florida and in several U.S. markets.

``Ours is a small company. We never want to lose the entrepreneurial spirit that [Miami Subs founder] Gus Boulis instilled here. The touchy-feely stf, I love that. I'm a very involved manager. But we had to move on,'' Russo said.

Miami Subs has replaced the frantic growth that characterized its early years with a slower, more targeted method of expansion. Rather than rushing to sign up franchisees, the company is more carefully monitoring whom it chooses to do business with.

Russo, a self-described organization freak, carefully monitors the company's expansion with a constantly updated chart tacked to his office walls that shows the progress of all planned new restaurants in the system.

Miami Subs is operating under a systematic business plan developed by Russo and his corps of managers during the past year. It is the company's first detailed blueprint for expansion since it started operations in 1989.

The plan has three basic tenets:

-- Improve new business by growing the number of restaurants.

-- Expand and improve business at existing restaurants through better management and training.

Also, requirements for franchisees interested in doing business with the company have gotten stiffer. Russo wants people on board who understand the restaurant business, are interested in opening more than one restaurant in a market and who are willing to make a long-term commitment to Miami Subs.

"We are no longer interested in having a situation of one franchisee in a market with one restaurant being out on his own," he said.

Russo has also hired a seasoned group of restaurant industry veterans to help him grow Miami Subs. His staff includes Art Gunther, the company's executive vice president of marketing, who spent 11 years with McDonald's and was responsible for the introduction of the Big Mac and the chain's breakfast menu.

It is under Gunther's direction that management is taking a careful look at Miami Subs' expansive menu, which offers everything from hamburgers to gyros to salads to Dom Perignon champagne.

Gunther said there was a need to make ordering meals at the restaurants simpler for customers. He has already cut the menu's offerings from about 72 items to 54. And some additional fine-tuning is still under way, including research into a new breakfast menu that will be introduced during the next few months at selected restaurants.

"Tom and I know where the company needs to be and we want it to be there now. It isn't," said Gunther, who was Russo's first hire after he joined Miami Subs.

Both men took cuts in pay to join the company. Both say they see unlimited opportunity in Miami Subs' future. To provide incentive, both were given stock options that could result in a lucrative payout once Miami Subs turns profitable.

Russo said the company should show a profit during one of the remaining two quarters of 1995, but will not yet show an annual profit.